How is British Airways’ Avios frequent flyer scheme changing?

British Airways is to change radically the way passengers earn Avios loyalty points on flights. From 2023, frequent flyer points will be awarded according to the fare paid rather than the distance flown.BA says the change ‘will unlock even more opportunities for our members to earn Avios when they fly’.But the move has been condemned as ‘a dud’ by a leading loyalty expert.These are the key questions and answers.Passengers on British Airways who enrol for the airline’s Executive Club can earn Avios points based on how far they fly. The loyalty points, formerly known as Air Miles, can be redeemed for future flights and other benefits.The number of Avios per mile flown is calculated according to three variables:Cabin class – World Traveller Plus, Club World and First passengers earn extra points, adding 25, 50 or 100 per cent to accrued points’Fare class’ – on heavily discounted fares, the Avios points are cut by 50 of 75 per centExecutive Club tier – frequent flyers who have achieved elite status gain an uplift of 25, 50 or 100 per cent in AviosOn a London-Singapore flight, a discount passenger in economy in the lowest (blue) tier earns 5,294 Avios, while a gold card member in first class accrues 42,344.It is impossible to establish a cash value for each Avios, because it all depends how they are redeemed. For very short notice British Airways domestic and European flights, they can be extremely valuable.Looking at a Edinburgh-Heathrow one-way flight on 1 November, booking 90 minutes before departure, the cash fare is £422. But the same seat is yours for just 4,750 Avios plus £17.50 in cash – making each Avios worth 8.5p.Upgrades to business class paid for by Avios can also represent excellent value.Conversely, on some long-haul flights, Avios can be worth a pittance . For a London Heathrow-New York JFK return booking on 15 November for a week, a cash buyer will pay £400. With Avios, it’s 50,000 plus £100 – making an Avios worth only 0.6p.One penny per point is a reasonable ballpark figure.From a yet-to-be announced date in 2023, the distance flown will be irrelevant. British Airways is to align with the policy just adopted by its Spanish sibling, Iberia.Passengers will earn Avios based on the price of their ticket. This will include extras paid for, such as seat selection and baggage. But it will not include taxes and charges.If the Iberia rate of five Avios for each €1 spent is adopted, British Airways is likely to give six Avios per £1 spent.Elite tiers will earn an uplift of 20, 40 or 60 per cent – significantly lower than the current bonuses.On that London-Singapore flight, departing on 17 January for a fortnight, the cheapest ticket will probably earn just short of 5,000 Avios (slightly down on the distance figure), while the most expensive accrues at least 67,000 – a rise of over 50 per cent.Assuming this first class passenger has premier status, the figure rises to over 107,000.British Airways and Iberia insist the new policy is fairer. The Spanish airline says: ‘Ways of travelling have changed and the Iberia Loyalty Program wants to adapt accordingly.’ Silvia Morán, Iberia’s client loyalty director, says ‘more loyal members’ have been requesting the change ‘for some time’. She said it is ‘more in line with other industry loyalty programmes’.Ian Romanis, head of retail and customer relationship management at British Airways, said: ‘We congratulate our colleagues at Iberia for introducing this change and we look forward to joining them in 2023.’More announcements will follow about what this change will mean for our Executive Club programme, which will unlock even more opportunities for our members to earn Avios when they fly.’US carriers mainly use this model, with the big three – American, Delta and United – all rewarding according to spend.Delta reminds passengers: ‘When you pay a higher price, you’re rewarded with more miles.’No. Rob Burgess, editor of the Head for Points website, spotted the British Airways reference in the Iberia announcement – and promptly rubbished the plan as ‘rewarding the wrong people most highly’. He says airline finance directors ‘can easily understand how the cost of miles is linked to the money coming in and so like the idea’.His argument: ‘The people who are flying on £10,000 fully flexible business class fares to New York are laughing all the way to the mileage bank. However, with few exceptions, these are corporate travellers whose choice of airline is made by their employer.’You could give these people zero miles and it wouldn’t impact the money that their employer spends with the airline. ‘This model of earning Avios has been used by other airlines and is generally agreed to be a dud.’He points out that business travel contracts offered by airlines to big financial institutions, consultancies and law firms airlines typically include a 20 per cent rebate.He says the new policy works against ‘small business travellers and leisure travellers, who have 100 per cent control over which airline they use and who pay the full sticker price’.The airline does exactly this with some extravagant benefits for gold card status – conferring first class lounge access, the chance to sit in the most desirable first-class seats (1A and 1K) and even the right to a seat on an apparently fully booked flight if 24 hours’ notice is given.Yes, says Rob Burgess: ‘Weirdly, you will now be rewarded more for flying expensive routes where only British Airways could have got you there. You will earn fewer Avios on competitive routes where you can choose between carriers.’For example, the distance from London to Bermuda and to New York is almost identical (Bermuda is 14 miles further). British Airways has a monopoly on Bermuda, and charges a minimum of £884 return in November.Yet to New York BA faces intense completion and must offers some fares at £400 to compete.Loyalty schemes are all about enticing customers in a crowded marketplace.’On routes where there is competition and where fares are lower, the lure of Avios is more important,’ says Mr Burgess.’You make more money by filling seats on cheaper, off-peak flights which would otherwise be empty, and this is where your loyalty budget should be focused.’No. Tier points for elite status will continue to be awarded according to flights made, without reference to how much the tickets actually cost.